STREAMLINING NORTH AMERICAN TREASURY OPERATIONS

Three Success Stories

Too often, companies engage multiple banks to meet their North American banking needs, including depository and treasury services. This can lead to excessive demands on time, frustration dealing with fragmented information, and increased costs. Fortunately, these challenges can be met by aligning with a banking partner whose services cross North American country borders, provide single depository platforms by country and single sign-on to bank information, and deliver the required scope and caliber of services. Many European companies choose Wachovia. And through alliance relationships, a number of European banks refer their clients to Wachovia for their North American banking requirements. Noted below are just a few examples of how European organizations have capitalized on Wachovia’s North American banking strength to streamline their treasury operations.

InterContinental Hotels Group PLC (IHG) (www.ihgplc.com) of the United Kingdom, capitalized at over £4bn, franchises or manages through its affiliated entities over 3,500 hotels in nearly 100 countries and territories around the world. Its Americas Region, headquartered in Atlanta, Georgia, USA, franchises approximately 2,500 hotels under its various brands in the United States and Canada.

Collection of franchise fees represented a special challenge due to the volume of paper-based payments within the US. With Wachovia, InterContinental found a solution that greatly simplifies its daily processing needs. IHG’s Americas Region franchising affiliate partners with Wachovia to have all paper-based franchise fees directed to a Wachovia wholesale lockbox. Daily, the bank picks up mail from the post office, captures and images IHG’s checks and remittance information, deposits the funds to the company’s designated US bank account and creates a report for the company that can be fed directly into IHG’s accounting and financial reporting software system. The report is electronically delivered through Wachovia Connection®, the bank’s Internet-based information reporting system, on a next-day basis. Access to images has allowed the company to streamline customer service processes and eliminate the cost associated with storing paper remittance information.

To further simplify the company’s North American collection of franchise fees, Wachovia opened an account for IHG with Wachovia’s Canadian NAFTA partner. Canadian franchise fees are directed to this account and the remittance information is consolidated with the information sent to the company from Wachovia each day, allowing IHG to update all North American franchise information through one transaction. Because Wachovia handles all implementation, servicing and billing for the Canadian account, management of banking relationships is simplified and streamlined. “We are impressed with the simplicity and ease of the Wachovia solution. It makes collection of our franchise check fees a smooth operation,” says Tammy England, Director of Americas Treasury.

Rexam PLC (www.rexam.com), headquartered in the United Kingdom, is a £3.1bn global consumer-packaging group and the world’s number one beverage can maker. Global operations span Europe, the Americas and Asia. Rexam employs some 22,000 people in more than 20 countries. North American operations include 23 plants in the United States and one in Mexico.

Several years ago, Rexam’s US cash flow and sales volume almost doubled due to acquisition. Immediately Rexam recognized the need to redesign its US cash management system to achieve greater efficiency. The company’s US Treasury Manager and London-based Treasurer designed a system to speed up funds flow and minimize the amount of time required to manually manage the daily US cash position. This system, which is still in use today:

• Directs remittances to a single, major US bank
• Automatically moves collected funds from the receivables bank to the company’s concentration and disbursement bank, Wachovia, on a daily basis
• Funds paper and electronic payments from the Wachovia concentration account
• Allows review of intra-day cash position reports to make investment and loan repayment decisions via Wachovia’s Web-based information reporting system, Wachovia Connection.

According to Clint Tumlin, Treasury Manager, Rexam Inc., “Wachovia Connection allows us to easily manage our cash flow position from any Rexam PC. When we are traveling or unable to get to the office due to weather conditions, we can use our Rexam laptops. And we’ve been able to decentralize daily bank account inquiries. Each of our US subsidiaries can access Wachovia Connection to view their own bank account activity, including their account balance and cleared checks, as well as place stop payments. This eliminates a lot of calls to the Treasury team.”

“The US is a big market and you have to deal with cash management. But we’ve found that if you plan well, and design a system with the appropriate controls and efficiencies, the time to manage cash becomes less demanding, providing time to work on other things,” Tumlin added.

Michelin (www.michelin.com), the world’s largest tire maker, manufactures and sells tires for every type of vehicle, including airplanes, automobiles, bicycles, earthmovers, farm equipment, heavy-duty trucks, motorcycles and the space shuttle. The company also publishes travel guides, maps and atlases covering Europe, Asia, Africa and North America. Headquartered in Greenville, South Carolina, Michelin North America employs 23,000, operates 21 plants in 17 locations, and represents approximately 35% of worldwide sales for the company.

The Michelin North America treasury team was facing some challenges coordinating its Mexican banking relationship through its US treasury group. Michelin uses a Mexican bank for its Mexican payroll, receivables and payables needs. Language, financial environment, protocol and information delivery issues were often time-consuming and frustrating to address. Michelin chose Wachovia, one of its primary US banks, to serve as a liaison with its Mexican bank, enabling it to simplify bank management and information flow. According to their manager of North American Treasury operations, “I’m now able to work through Wachovia for almost all of my Mexican banking needs. Their bilingual support, contacts within our Mexican bank and knowledge of the Mexican banking environment have improved our efficiency. Through Wachovia, documentation requirements are streamlined and our previous day information reporting (MT940) is provided in the same BAI format as our US bank information, which is very valuable to us.”

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